Project Leader: Paul Ekins
Sponsor: Consumer Policy Institute
It is now well understood that the natural environment provides a range of goods and services that are of great importance to consumers. It is also now generally accepted that there are limits to the extent to which humans can consume, or disrupt the provision of, these goods and services. There are two main ways in which governments seek to constrain - or ration - the excessive consumption of environmental goods and services: regulation and the price mechanism. It is now generally perceived that, while both administrative and price-based rationing have a role to play in environmental policy, in many cases the latter will yield a given level of environmental protection at lowest overall social cost.
A number of environmental goods and services, such as water and fossil energy (which produces the greenhouse gas carbon dioxide when burnt) may be regarded as fundamental consumer needs. This means that the rationing of these goods cannot be considered solely in terms of economic efficiency. Considerations of fairness also need to be taken into account. Indeed, such considerations have led the Government in the UK to rule out use of the price mechanism to ration domestic fuel use altogether. There is also concern about the impact of road fuel taxes on low-income households in rural areas, and of moves to metering in water use. These are three of the issues that will be explored in this research project on rationing consumer use of the environment.
The objectives of this project are:
1. To identify the level of consumption, for different types of household and for different circumstances, of certain environmentally significant goods and services, including water and energy for home and transport use, which may be regarded as fulfilling a fundamental consumer need. This research will be undertaken through the desktop analysis of a wide range of sources which give statistical details of the consumption of water and energy by households. This consumption will be related to analyses of the needs of households for these two resources, resulting in a clear characterisation of different fundamental household needs for energy and water, which pays special attention to those whose needs in respect of these resources are greatest.
2. To propose mechanisms whereby these fundamental needs can be satisfied at a cost that is affordable to low-income households, so that use of these goods and services in excess of these levels may be rationed by price where appropriate and necessary. The mechanisms to be analysed include the welfare and benefits system, energy and water tariff and tax structures, tradable consumption/emission quotas. Policy proposals will be made as to which of these mechanisms may be most appropriate for use in the contexts analysed.
Importance of Research
One of the key insights of sustainable development thinking is that constraints on the consumption of natural resources should not have a disproportionate impact on the disadvantaged. Yet it is apparent that, with regard to the consumption of some essential natural resources, policies to restrain consumption, especially price-based policies, may have just such an impact. There is a risk that either the implementation of such policies will be unfair, or that it will not be undertaken, so that either resource consumption will continue to be excessive, or it will be restrained by less efficient policy instruments. Either way, society suffers, either now or in the future. This research will show how any regressive impacts from efficient environmental policies may be removed, so that such impacts may not militate against such policies being introduced.